5. Template of selected model indicators for studying the impact of globalization and TRIPS on access to medicines

The enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being, as defined in the Constitution of the World Health Organization. Progressive realization of that right involves access to health facilities, prevention, care, treatment and support, including access to medicines. Access to essential drugs depends on: (1) rational selection and use of medicines; (2) sustainable adequate financing; (3) affordable prices; and (4) reliable health and supply systems. The World Health Organization has a rich tradition of promoting and monitoring policies designed to secure access to medicines.

The introduction and expansion of intellectual property protections in countries around the world, particularly developing countries with weak traditions of intellectual property protection, is a major new factor potentially impacting on countries’ ability to ensure access to drugs. Basic economic theory and the underlying logic of intellectual property suggests that the adoption of new intellectual property rules will exert influence on drug pricing and availability, research and development systems, foreign direct and domestic investment patterns (The World Bank, Global Economic Prospects, 2002).

Thus it is vital to draw on WHO’s extensive experience in drug policy and price monitoring and elaborate on it in order to assess the effect of globalization and TRIPS on access to drugs.

The following template is intended primarily to monitor the pharmaceutical implications of globalization and the implementation of the TRIPS Agreement in countries. It was designed by a steering committee consisting of the secretariat, representatives of WHO Collaborating Centres and independent experts. It will be field tested and refined; and is subject to ongoing revision and updating based on experience. The template endeavors to shed light on four questions:

* How is patenting affecting drug pricing?

* How are patents and enhanced intellectual property protections affecting the rate of introduction of generic drugs?

* Are TRIPS and expanded intellectual property protections spurring development of drugs for neglected diseases?

* Are TRIPS and expanded intellectual property protections contributing to an increase or decrease in transfer of technology and direct foreign investment in developing countries?

It is designed with the understanding that neither globalization nor the TRIPS Agreement are monolithic. The process of economic globalization contains many contradictory trends and impulses. The TRIPS Agreement, while establishing a universal minimum set of obligations for all Members, also contains exceptions, built-in flexibilities and ambiguities that mean implementation will inevitably take different forms in different countries; and attributions of particular national policy revisions to the requirements of TRIPS must recognize the range of choices available to national decision makers on how to implement the TRIPS accord. Moreover, the TRIPS Agreement itself is embedded in the broader process of globalization, and exists amidst other trade and other international agreements that impose particular and related requirements on countries. Thus, caution must be exercised in seeking to establish evidence-based conclusions about the overall effect of TRIPS on access to drugs.

The template is also designed with the understanding that, whatever the impact of globalization and the TRIPS Agreement on access to drugs, they are not the sole nor necessarily primary determinant. Traditional factors - including countries’ wealth, public and private spending on health, commitment to essential drugs policy, procurement system, national insurance mechanisms, price controls, distribution systems, and consumer awareness - continue to vitally influence access to drugs.

At the same time, the changes in national policy effected by globalization and TRIPS are real and discrete. TRIPS, for example, requires many countries that previously did not grant patents on pharmaceuticals, or did so only in limited circumstances, to grant both process and product patents for a minimum term of 20 years. While the TRIPS requirement for protection of undisclosed data (registration or marketing approval data) is ambiguous, many countries are beginning to grant set periods of exclusive protection for undisclosed data, and some trade agreements include such requirements. It is important to gather information on how these and other specific policy mandates are being implemented in countries, and, to the extent possible, gather data that will offer insights into how these national policy changes are affecting overall access to drugs.

In pursuit of this goal, the template circumscribes the information it is seeking. As WHO has said in offering indicators for monitoring national drug policies, “Although a national drug policy is ultimately intended to improve the overall health of a population, health impact indicators are not included in this manual for three main reasons: the multifactorial nature of health status, the consequent complex issues of causality associated with drug policy and health status, and the unresolved methodological difficulties of selecting reliable health indicators directly related to the use of drugs” (“Indicators for Monitoring National Drug Policies,” WHO/EDM/PAR/99.3). For these reasons, this template does not include health impact indicators. For reasons of focus and with an eye toward resource limitations, the template does not include a full range of indicators for monitoring national drug policies.

What the template does include are indicators for assessing relevant aspects of pharmaceutical financing, pricing, investment, registration, prescription regulation, intellectual property protections and consumption.

Some of the indicators relate to broad national policies and practices. Others correspond to the market or regulatory situation for a particular drug.

As described in the elaboration below of the categories of indicators, analysis of the indicators should reveal correlations among trends in the different indicators, for example, between intellectual property protections and levels of foreign direct investment. These correlations can be tracked within countries, between countries, and over time. There will be some opportunity for testing against partial “control” categories, including between WTO Members and non-members; but there is no perfect control, because no Member stands outside the processes of economic globalization.

Revision of the template and assessment of the data

A fundamental element of the methodological approach of the Network will be to continuously revise the survey instrument based on results from the field. Initial field tests by the Collaborating Centres should help identify any major problems with the indicator template: data that is not accessible, unclear or problematic methodologies for data collection, unclear definitions. After initial field testing, the Network’s steering committee will review and revise the template as appropriate. After this initial revision, it will be important for the basic indicators to remain constant to ensure data consistency across time; but the steering committee will work to continuously clarify and revise at the margins the template based on accumulated experience.

The indicators in the template are wide reaching, covering a broad array of policies and detailed information for numerous drugs. The experience obtained in the course of the data collection will indicate which data are more and which less robust. Bad data may well be worse than none, or useless; but imperfect data, so long as its limitations are acknowledged, is far preferable to none, offering important signals about national situations. While there will be significant limitations in the analytic conclusions that can be drawn from the data, the Network is optimistic that the data will enable a much more evidence-based discussion of the potential impact of globalization and TRIPS on access to pharmaceuticals.

Selection of drugs for monitoring

The Bangkok meeting participants agreed on an initial list of drugs to be monitored. These drugs fall into three categories: (1) non-patented pharmaceuticals included in the WHO Model List of Essential Drugs; (2) non-essential drugs under patent protection to serve as the “control” group, and (3) patented pharmaceuticals which are important drugs for treatment of HIV/AIDS and AIDS-related opportunistic infections.

Selected drugs included on the WHO Model List of Essential Drugs (EDL), 11th edition, 1999

Essential Drugs/No patent protection.

Criteria: different therapeutic groups, different indications [chronic and acute diseases, severe and mild diseases], different populations [aged, infants], different status [OTC, prescription], and old and new drugs.

Selected drugs not included on the WHO Model List of Essential Drugs (EDL), 11th edition, 1999

A list of non-EDs under patent protection is suggested to serve as the control group. These drugs had been selected for different reasons, high usage, potential health impact, new drugs of therapeutic groups already included in the first category of drugs to be monitored, non-therapeutic drugs, new drugs with useful, well-known and safe alternatives.

Selected drugs indicated for the treatment of HIV/AIDS and other severe and life threatening infections

Important drugs indicated for the treatment of HIV/AIDS and opportunistic infections under patent protection (Includes some drugs on the WHO Model List of Essential Drugs).

Probably the most important price and access evolution in the following few years will involve access to drugs for treating HIV/AIDS and related opportunistic infections. The WHO Model List of Essential Drugs (EDL) includes fluconazole (opportunistic infections, antifungal), zidovudine and nevirapine (antiretrovirals; specific indication; prevention of MTC transmission). EDL includes ciprofloxacin as a model of quinolone antibiotic (it has been included in the first group of drugs); ofloxacin, a new quinolone, could serve as an example of drug under patent protection to compare with ciprofloxacin. The same applies for azithromycin, a new macrolide antibiotic similar to erythromycin from the first list. The remaining suggested drugs are antiretrovirals recommended by the WHO guidelines and other international organizations involved in HIV/AIDS treatment but are not included in the latest available EDL (1999). The fixed-dose combinations (lamivudine + zidovudine) and (zidovudine + lamivudine +abacavir) have been included although they are not marketed in all countries because their use is likely to increase during the following years.

Following is an initial list of drugs chosen to be monitored:

Selected drugs included on the WHO Model List of Essential Drugs (EDL), 11th edition, 1999

Drug

Dosage*

Erythromycin

250 mg

stearate/ethylsuccinate

Ciprofloxacin

250 mg

HCl

Rifampicin

150 - 300 mg

Doxycycline

100 mg

HCl

Cyclophosphamide

25 mg

Hydrochlorothiazide

25 mg

50 mg (if 25 mg not available)

Atenolol

50 - 100 mg

Salbutamol

Inh. 100ƒÊg

As sulphate

* If not indicated, pharmaceutical dosage forms are tablets.

Selected drugs not included on the WHO Model List of Essential Drugs (EDL), 11th edition, 1999

Drug

Dosage*

Candesartan

4 mg

Celecoxib

200 mg

Orlistat

120 mg

Sildenafil

50 mg

Olanzapine

10 mg

Levofloxacin

500 mg

Atorvastatin

10 mg

Montelukast

10 mg

Esomeprazol

20 mg

* If not indicated, pharmaceutical dosage forms are tablets.

Selected drugs indicated for the treatment of HIV/AIDS and other severe and life threatening infections

Drug

Dosage*

Fluconazole **

50 mg

Zidovudine **

300 mg

Nevirapine **

200 mg

Azithromycin

500 mg

Didanosine (ddI)

150 mg

Indinavir

200 mg

Lamivudine

150 mg

Ofloxacin

200 mg

Lamivudine + Zidovudine

150 mg + 300 mg

Zidovudine+Lamivudine+Abacavir #

300 mg + 150 mg + 300 mg

* If not indicated, pharmaceutical dosage forms are tablets.** Included on the EDL, 11th edition# If available as a fixed-dose combination

To monitor change, data should be collected periodically. The agreed initial period for the Network for Monitoring the Impact of Globalization and TRIPS on Access to Pharmaceuticals is six years - three years prior to the onset of the project and three years forward in time, with data collected annually. Although there may be some difficulties in gathering at least some of the data for the suggested indicators for years past, it is critical that researchers undertake their best effort in this respect; these data will serve as important baseline data, in many cases revealing the state of affairs prior to changes in countries’ intellectual property rules spurred by globalization or mandated by TRIPS or other international agreements.

Countries have different health systems; and some questions in the template will inevitably be more relevant than others for each country. An occasional question may be left unanswered if its does not apply to a particular country situation. Collaborating Centre researchers will seek to collect as complete data as possible, however, to facilitate the comparability of country data and solidify the data foundation for subsequent analysis. Data collectors should add explanatory notes on particular aspects of data collection and on any aspect they deem useful for analysing a particular country situation.

As data is collected, the Collaborating Centres will be able to analyse correlations between trends in pricing, investment, intellectual property protections and other indicators, with the ability to do comparisons over time, between countries, and among drugs and categories of drugs. They should be able to begin to identify the impact of new and expanded intellectual property protections on access to drugs.

The specific indicators included in the template fall into six categories: (1) trends in total pharmaceutical consumption; (2) health care coverage; (3) structure of public and private pharmaceutical prices; (4) intellectual property protections; (5) pharmaceutical prices; (6) market share of domestic and foreign firms; and (7) prescription regulation. The content, use, methodology for gathering and limitations of indicators in each of these categories is elaborated below.

Trends in total pharmaceutical consumption

The trends in total pharmaceutical consumption indicators include such data as total national spending on healthcare, total national spending on pharmaceuticals, total public spending on healthcare and pharmaceuticals, expenditures on pharmaceutical imports and on locally produced pharmaceuticals, and consumption of generic medicines as a percentage of overall pharmaceutical consumption.

These are background indicators that, first, provide a context in which to assess changing trends in more particular indicators and, second, may provide important information in aggregate trends in healthcare and pharmaceutical expenditures in the context of TRIPS and globalization. For example, correlations between trends in percentage of pharmaceutical expenditure on imported goods and intellectual property protections, or between sales of generics and intellectual property protections, will offer some insights into how TRIPS and globalization are impacting foreign direct investment and access to generics.

These data are aggregate. The Collaborating Centre researchers will rely primarily on national authorities and international organizations (International Monetary Fund, World Bank, United Nations Development Programme) for the data, also relying on associations of manufacturers or professional associations for certain data. They may make calculations to identify certain data points (for example, public expenditures as a percentage of total expenditures on pharmaceuticals), but they are not expected to do primary data collection.

These data provide a background for analysing, and perhaps some broad indications of, the effects of TRIPS and globalization on access to drugs. But especially because they are aggregate, any conclusions drawn from a country’s trends in these data can only be tentative, and must be confirmed through examination of other indicators, use of the data over time and comparison of multiple countries’ data.

Health care coverage

The health care coverage data includes percentage of population covered by public and private health care schemes, extent of health care scheme coverage of pharmaceuticals, and reliance on consumer co-payments for pharmaceuticals.

As with the trends in pharmaceutical consumption indicators, these are background indicators that, first, provide a context in which to assess changing trends in more particular indicators and, second, may provide important information in aggregate trends in healthcare and pharmaceutical expenditures in the context of TRIPS and globalization. For example, do co-payment requirements change over time in connection with changes in price and intellectual property rules?

The percentage of population covered by public and private health care schemes are calculated based on aggregate data to be sought from national authorities, international organizations and private health care provider associations and companies. The health care coverage questions on public and private health care schemes’ coverage of pharmaceuticals may yield multiple answers, reflecting varying policies among public and private providers, between private providers if there are multiple health care schemes, or between different options offered by one or more private provider. In such instance, the data collectors should gather and report separately information from both the public and private sectors. In the private sector, if there are five or fewer providers, data should be reported for them all. If there are more than five providers, data should be reported for five, including the three largest and a medium and smaller provider.

As with the trends in pharmaceutical consumption indicators, these data provide a background for analysing, and perhaps some broad indications of, the effects of TRIPS and globalization on access to drugs. But especially because they are aggregate, any conclusions drawn from a country’s trends in these data can only be tentative, and must be confirmed through examination of other indicators, use of the data over time and comparison of multiple countries’ data.

In countries where there are numerous private health care schemes, data collected on pharmaceutical coverage of health schemes will be indicative rather than comprehensive. Moreover, national government policies to cover pharmaceuticals may not be reflected in on-the-ground reality, particularly in that drugs may not be available to some consumers, despite a government policy to provide them.

Structure of public and private pharmaceutical prices

These data are designed to indicate the relative share of retail price of drugs allocated to manufacturers, wholesalers, dispensers, VAT or sales tax and other taxes. They are to be gathered separately for the public and private sectors.

The data will enable researchers to track over time the changing components of drug prices. This particularized data will help contextualize demonstrated trends in pricing. For example, the data may help explain that across-the-board drug price increases are due to a VAT increase, and not other potential factors. The data will also help illustrate how increased costs in one component interact with others.

The information for these indicators should be obtained from national authorities at the ministry of health, the national drug authority and elsewhere, wholesalers/importers, private insurers, pharmacists through interviews and review of public and private sector documents (such as regulations and price lists).

These are aggregate data, again subject to the important limitations noted above for other aggregate indicators. Moreover, because the data is collected as a percentage of overall price, it may not be possible to use the data to identify increases or decreases in each item (as opposed to the relative expense of each factor). For example, if ex-factory prices fall by 20 percent, but so do other factors, then this data will not reveal the ex-factory price decline.

Additionally, experience will indicate to what extent data collectors are able to assemble precise data on these questions. Given the complexity of the targeted data, it is likely that the data will not be perfect. The data should be robust enough, however, to provide strong evidence of the relative price contribution of the different price factors, especially related to changes over time. Analysts must recognize potential limitations in quality of the data.

These data include indicators regarding whether a country provides patent protection for pharmaceutical products, whether it has modified its national legislation to implement the TRIPS Agreement, whether it permits parallel importation of pharmaceuticals, whether it authorizes compulsory licensing and whether any compulsory licences have been issued for pharmaceuticals, whether generic manufacturers can use patented inventions to obtain marketing approval prior to expiration of the patent (whether a “Bolar” provision is in place), and whether a country provides exclusivity protections for marketing approval test data. Indicators also seek information about marketing approval authorities, linkages between process of marketing approval and issuance of patents, and the length of time for marketing approval of patented and generic pharmaceuticals.

These are basic data to profile a country’s intellectual property rights system and system for providing marketing approval for pharmaceuticals.

The data will show whether a country grants patents for pharmaceuticals, whether it avails itself of the flexibilities in the TRIPS Agreement providing for parallel imports, compulsory licensing and Bolar provisions. They also provide important evidence on whether and how pharmaceutical marketing approval is connected to the intellectual property system - through special protections for marketing approval data that may delay the introduction of generics, or through linkages of marketing approval and patent claims. They provide information as to changes in time for approval of generics which may be associated with changes in certain intellectual property rules. Together, these are the key intellectual property-expanding policies associated with globalization and TRIPS, as well as the most important exceptions and flexibilities. No such basic compilation of national intellectual property rules exists, making the gathering of this information by the Network an especially important task.

Most of this information can be gathered from national authorities, including from the national patent office and/or ministry of commerce or industry and the ministry of health, as well as from review of relevant laws and regulations. Some of the data on marketing approval (specifically questions 4-6 on pre-marketing authorization) will only be available from the national drug or health registration authority. If the national drug authority has not compiled the averages sought in questions four and five, it will be necessary to obtain the raw data from the national drug authority (amount of time for approval of each new and generic pharmaceutical product) and to calculate the desired averages.

These indicators do not by themselves illustrate anything more than the rules of a country’s intellectual property system and its system of marketing approval. They may correlate in ways that prove to be of interest with changes in price or investment levels. But double caution must be exercised in drawing related conclusions: first, the correlations must be shown, not assumed. Second, analysts must remain mindful of the distinctions between correlation and causality.

Price of pharmaceutical products

These data include indicators relating to the pricing regulatory system in a country - that is, whether prices are determined by market forces only, firm price controls, or another system. The bulk of the data in this section includes price indicators for the template’s selected drug list, including average public and private prices of each drug, in both branded and generic versions.

Price is obviously a key - though certainly not decisive - factor influencing drug availability. The trends in pricing revealed by the data will be important indicators of changes in drug accessibility. Gathering data for both on-patent and off-patent drugs will enable comparisons that will provide some evidence of the effect of intellectual property protections on pricing. Correlations with other collected data, including changes in intellectual property rules and changes in pharmaceutical industry investment patterns will offer evidence for the potential impacts of TRIPS and globalization on drug access.

Information for the pricing regulatory indicators should be obtainable from national authorities, primarily the ministry of health and the national drug authority.

Gathering annual average price data is much more complicated. WHO has initiated a project with several nongovernmental organizations and a private foundation to standardize methods for drug pricing surveys with the aim of increasing the quantity, quality, comparability and transparency of information. Prices for selected essential drugs have been collected for different subsectors of the health system in several countries including Armenia, Brazil, Kenya, South Africa and Sri Lanka. The Network will seek to rely on this methodology to the extent possible: and Network researchers will collaborate with others implementing the WHO pricing project to avoid duplicative work in data gathering.

The pricing data should be robust, but will nonetheless be subject to numerous limitations both in fullness and quality and in analytic value. On the fullness and quality axis, some of the selected drugs may not be available in some countries, or may be available only in generic or branded versions, or may be available only in the public or private sector. Where categories of products do not exist, data obviously cannot be gathered. Resultant holes in the data collection may somewhat limit subsequent analyses. Furthermore, primarily due to resource limitations, Network researchers may in some cases not be able to obtain the desired number of data points for calculating average prices of certain drugs. In such cases, researchers will have to obtain as much information as possible; and the Collaborating Centres will need to make determinations about whether the data are sufficiently robust to merit inclusion in the finalized monitoring data (with proper notation of data shortfalls). On the analytic axis, it will again be important to recognize the distinction between correlation and causality in drawing analytic conclusions, as well as to recognize the multiple influences on pricing.

Market share

These data include indicators on market share of domestic pharmaceutical companies and presence and type of foreign direct investment in the pharmaceutical sector.

Increasing domestic production and foreign direct investment are important ends unto themselves, for their role in facilitating national economic development and for technology transfer. As articulated in the objectives of the TRIPS Agreement, the “protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology.” Domestic production and foreign direct investment may also have important implications for pricing and access. The price of domestically produced drugs may be less affected by changes in currency valuation than imported drugs; the use of domestically produced drugs may also save valuable foreign currency. Domestic production capacity may meaningfully assist with the more rapid and widespread availability of more affordable generic drugs; and establishing or expanding domestic production capacity to facilitate bulk production of drugs may maximize economies of scale. There are, as well, likely to be significant linkages between intellectual property rules and the state of domestic industry and foreign direct investment. For example, enhanced intellectual property rules may correlate with increased levels of foreign direct investment.

These data should be available from national authorities, including the ministry of health and or industry, as well as national trade associations of domestic and international pharmaceutical producers.

The level of foreign direct investment, and especially the strength of the domestic industry, are influenced by numerous factors other than intellectual property rules. Analysts should acknowledge the inherent multifactoral nature of these trends.

Regulation of pharmaceutical consumption - a stakeholder analysis

These indicators relate to national drug policies on promotion of generics, including use of generic prescribing and generic substitution. These are basic data to profile a country’s policies to promote the use of generic drugs.

Indication of policies on generic promotion are an important variable to factor in equations on national consumption of generic and branded drugs. For example, cross-country comparisons of generic reliance, aimed at discovering potential correlations with intellectual property rules, must also account for the presence or absence of specific generics-promoting policies.

These data should be available from the ministry of health or national drug authority.

The existence of broad policies does not guarantee their across-the-board implementation, an important caveat to which analysts must remain alert.